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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. When firms focus their resources on production of goods for which they have comparative advantage






2. The additional cost incurred from the consumption of the next unit of a good or a service






3. A firm that has market power in the factor market (a wage-setter)






4. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






5. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






6. Total product divided by labor employed. APL = TPL/L






7. Entry of new firms shifts the cost curves for all firms downward






8. Demand for a resource like labor is derived from the demand for the goods produced by the resource






9. Costs that change with the level of output. If output is zero - so are TVCs.






10. Ed > 1 - meaning consumers are price sensitive






11. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






12. The total quantity - or total output of a good produced at each quantity of labor employed






13. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






14. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






15. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






16. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






17. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






18. Exists at the point where the quantity supplied equals the quantity demanded






19. Es = (%dQs) / (%dPrice)






20. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






21. A good for which higher income increases demand






22. A good for which higher income decreases demand






23. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






24. The rational decision maker chooses an action if MB = MC






25. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






26. The change in quantity demanded resulting from a change in the price of one good relative to other goods






27. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






28. The additional benefit received from the consumption of the next unit of a good or service






29. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






30. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






31. Ed = (%dQd)/(%dP). Ignore negative sign






32. The sum of consumer surplus and producer surplus






33. Product demand - productivity - prices of other resources - and complementary resources






34. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






35. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






36. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






37. Ed = 0 - no response to price change






38. Two goods are consumer substitutes if they provide essentially the same utility to consumers






39. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






40. The output where ATC is minimized and economic profit is zero






41. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






42. Ed = 1






43. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






44. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






45. The price of a good measured in units of currency






46. AVC = TVC/Q






47. Occurs when LRAC is constant over a variety of plant sizes






48. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






49. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






50. The practice of selling essentially the same good to different groups of consumers at different prices






Can you answer 50 questions in 15 minutes?



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